Chinese steel maker Shougang's proposal to acquire a 19.7 percent stake in iron ore miner Mount Gibson Iron Ltd has been blocked by the Australian regulator because of its association with an existing shareholder.
Shougang Concord International Enterprises Co, a Hong Kong-listed unit of Beijing-based Shougang Corp, announced on January 31 the acquisition of 156.8 million shares in Mt Gibson from Gazmetall Holding Cyprus Ltd, controlled by Russian billionaire Alisher Usmanov.
Mt Gibson then approached Australia's Takeovers Panel to prevent the sale amid concern that Shougang links to another of its major shareholders, and said Shougang had not informed it that it planned to launch a takeover bid.
Shougang Holding (Hong Kong) Ltd, another Shougang Corp unit, owns 18 percent of APAC Resources Ltd, which has a 20.2-percent stake in Mt Gibson. This means Shougang would have had indirect control of about 40 percent interests in Mt Gibson after the acquisition, which is seen as an attempt to gain control of Mt Gibson without making a takeover offer.
The Takeovers Panel on February 29 ordered Shougang and Gazmetall not to complete the transaction for up to two months while it investigated.
The panel said yesterday it had made final orders canceling the contracts effecting the proposed transaction between Gazmetall and Shougang, as it ruled there was a relationship between Shougang and APAC and there would be an "unacceptable effect on the control or potential control" of Mount Gibson if Shougang acquired Gazmetall's stake.
Mt Gibson said it was pleased to see that its concerns have been addressed. Its shares fell 1.4 percent yesterday.
"While Shougang International believes that it has sought to comply with Australian law and regrets the panel's decision, it respects that decision and will not seek a review," company secretary Carmen Cheng said.
With more Chinese companies looking to tap into overseas mines in order to secure a supply of resources to the world's largest steel making nation, experts have suggested that, if they are unfamiliar with foreign regulations, the companies should carry out more preparation work and have back-up plans in case of rejection.
(Shanghai Daily April 2, 2008)
